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Harley Davidson Preparing For The Next Century Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 1759 | 1888 Words (9 Pages) | Richard L. Nolan, Suresh Kotha | Harvard Business School : 906410 |
A Word File
Harley Davidson (HD) is one of the leading motorcycle brands in the world with massive brand recognition; however, according to the case (Nolan and Kotha), it faces several issues that need to be resolved. Firstly, the competitors are quicker to understand the changing market dynamics and untapped market segments. The companies like Honda, Yamaha, and Suzuki have successfully introduced lower-priced, lighter and faster motorbikes, which are the winner.
Secondly, HD is more targeted towards boomers, which makes it less appealing for younger generations. This is why HD has to close Buell line and sell MV Augusta brand. There is a huge potential in sports, and standard motorbikes market but all attempts of HD to tap into those markets have been unsuccessful.
Following questions are answered in this case study solution
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Issues
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Problem Statement
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External Analysis
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Internal Analysis
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Value Chain Analysis
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Alternative Strategies
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Recommended Strategy
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Implementation
Case Analysis for Harley Davidson Preparing For The Next Century
2. Problem Statement
All the issues lead to a major problem:
“HD has been moved into a niche which is making it difficult to enter new segments and different target market”.
This is a problem because even though current sales are good, they are slowing down in the future. Lower sales in the main segment will cause problems for the company. Moreover, the main target market is ageing, and the brand is unpopular in younger generations. Similarly, competitors have a stronghold in other segments of the market by providing quality bikes at lower prices.
3. External Analysis
In order to come up with strategies to solve identified problems, external and internal analysis is imperative. If we look at the external environment of HD, we can summarize it in the following manner:
|
5 Forces |
Intensity |
|
Threat of Competition |
Strong |
|
Buyer Power |
Strong |
|
Supplier Power |
Weak |
|
Threat of Substitutes |
Moderate |
|
Threat of New entrants |
Moderate |
Table 1: Porter's 5 forces
The motorcycle industry is highly competitive due to many reasons. Firstly, there are a lot of competing firms from big giants such as Honda and Yamaha to smaller local firms. Secondly, the substitutes available to customers are numerous such as cars and public transport. Moving on, the power of customers in the industry is strong because there are many substitutes available to them. Moreover, the cost of switching between the substitutes is moderate, which makes it easy for customers to switch. Similarly, the industry is very open to buyers feeding them with information and seeking valuable input from them, so they are a strong pillar.
The power of suppliers is weak because they are small in scale compared to the manufacturing giants; hence, there are low chances of forward integration. Similarly, the number of suppliers in the industry is high, so they are under pressure to satisfy the manufacturers and prevent them from switching. The threat of substitutes (other means of transport) for HD is moderate because even though there are a lot of alternatives available but the core customers of HD (heavy bike riders) will not shift to those alternatives as they do not find them appealing. Lastly, the threat of new entrants is moderate as even though the customers can switch to other brands the cost of building a brand is very high, and the new firm might have difficulty in achieving the economies of scale.
4. Internal Analysis
The internal analysis is presented in the table below:
|
Resources |
Valuable? |
Rare? |
Costly to imitate? |
Exploited by the firm? |
Economic Implication? |
Competitive Implication? |
|
Buyer circle |
Yes, because the customer community is co-creating goods |
Yes, because the company has a very outstanding bond with its customers |
Yes, it is tough to copy the kind of commitment and drive of the community |
Acknowledged but not fully exploited |
Increases profits |
Provides edge over competitors |
|
Ease in the availability of crucial Raw-material for accurate execution |
Yes, the Material-as-needed (MAN) program results in marked productivity improvement |
Yes, it gives HD dominance in the market over competitor |
No, it can be easily copied by the competitors |
Yes |
Reduces tied up cash and cuts costs of production and maintenance dramatically |
Gives a sustainable competitive edge |
|
Brand recognition |
Yes, it is very valuable |
Yes, it is one of the top brands in the market |
Yes, needs a large budget |
Yes, HD has made use of its brand awareness in times of need |
Increases new product success chances |
Gives a sustainable competitive edge |
|
Finance availability |
Yes, especially for strategy implementation |
No |
No, external funding options are available to other companies as well |
HD has sustainable monetary standing |
Cost of financing increases |
Provides temporary edge |
|
Brand positioning compared to rivals |
Yes |
No, all competitor strive to position their brand well |
Yes, it can be emulated by rivals but needs a huge marketing budget |
Yes, the brand is positioned on the basis of lifestyle and attitude |
Gives the higher market share |
Provides temporary edge |
|
Options in E-Commerce with current IT abilities |
Yes, E-Commerce is the present, and the future and HD can grip the opportunities |
No, all the competitors are aware of its potential and are financing the options |
Yes, the Artificial Intelligence (AI) and in-house analytics are not easy to copy |
No, HD is currently not exploiting it but in the future, it definitely can |
High initial investment but can cut costs and improve profitability |
Can give a sustainable edge in the future |
|
Marketing prowess in the company |
Yes, competition in the industry is on the grounds of product differentiation too |
No, all the companies are aware of marketing tactics and its significance |
No, pricing is matched in competitive pricing |
Yes, HD takes full advantage of marketing capabilities available |
Increases marketing costs and market share |
Provides temporary edge |
|
Relationship with Retailers and wholesalers |
Yes, it strengthens the value-chain |
Yes |
No, but slightly difficult |
Yes, it has been exploited over the years, for example, the Rider's Edge and Rental Programs |
Cut costs and increase profits |
Gives sustainable edge |
|
Ability in attracting experts |
Yes, they add significant value |
Yes |
Yes |
Yes |
Cost increases |
Gives a powerful advantage |
Table 2: VRIO Table
5. Value Chain Analysis
Value Chain analysis will allow to identify how certain activities play a role in adding or reducing value in the overall business. This will allow us to find out what impact each activity has on HD. The 5 primary activities of the company are:
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